Future Enterprises is considering building a factory that will include an option to expand operations in three years.

Class – Future Enterprises is considering building a factory that will include an option to expand operations in three years. If things go well, the expansion will have an expected value of $10 million and will cost $2 million to undertake. Otherwise, the expansion will have an expected value of only $1 million and will not take place. What information would we need in order to analyze this capital budgeting problem using the traditional NPV approach that we would not need using option valuation techniques?

Note – Please note that the requirement is to post your Initial Response (300 – 350 words) by Wednesday and Two Peer postings (200 to 250-words) before Sunday. Make sure you write these answers by conducting some research and cite both textbook and external credible sources.

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